Israel-Palestinian ConflictI believe that Israelis and Palestinians can live side-by-side in a secure and peaceful Middle East. An agreement based upon mutual understanding and respect, guaranteed security, and an economically transformed Middle East, can deliver hope to two nations who have suffered far too much. It is my clear strategic assessment - not a matter of political rhetoric - that only through a negotiated settlement can a durable peace be achieved that will enhance our security, guarantee our national interests, and end this tragic conflict once and for all. There is no other alternative.

Israelis and Palestinians alike yearn for peace. Throughout my military and political career, I have aggressively supported Israel's peace process from the Oslo Accords to contemporary initiatives that not only seek to end this terrible conflict, but aspire to create a better future for both people. Together with honest Palestinian leaders, we can transform anger and frustration into hope and co-existence and build the necessary bridge between our demand for security and the Palestinian's demand for statehood.

I dream of peace and pursue it with every breath, but I know too well Israel's precarious security situation. From my service in southern Lebanon, the West Bank, and other areas, I have come to understand all too intimately the challenge of protecting Israeli citizens from the scourge of terror and the imperative to destroy the infrastructure of terror in the region. Without meeting these conditions, however, there can be no progress towards peace.

Current OpportunitiesIn April 2003, together with then Prime Minister Mahmoud Abbas and other Palestinian leaders, I formulated the "Gaza Pilot," a plan proposing the gradual withdrawal by Israel from Gaza within a year, conditioned on the elimination of terror and accompanied by economic development of the Gaza Strip.

More than two years later, Israel's disengagement from Gaza and the election of a moderate Palestinian leadership in a post- Arafat Middle East opens a unique window of opportunity for the region. The evacuation of settlements in Gaza, while extremely painful for Israel, provides a platform for potential cooperation with Palestinians and renewed hope for peace.

This disengagement is critical for Israel, but it must be coordinated with the Palestinians. In November 2004, with ten Israelis and Palestinians, I penned "the Athens Plan" based on the need to transform disengagement from a unilateral Israeli is bound to bring about chaos, humanitarian crises and domination by Hamas in Gaza, into a bilateral Israeli-Palestinian plan with the support of the international community. While there are great challenges to disengagement, genuine coordination with the Palestinians will mitigate the security and economic risks and bolster the prospects for long-term cooperation.

Now that disengagement is a reality, the real issue is what happens the day after Israel pulls out from Gaza and the northern West Bank? Will Israel choose to end the war or continue to build the settlements? Israel cannot sustain the moral and strategic costs of ruling over millions of Palestinians in the West Bank and Gaza. Without removing thousands of Israelis living in settlements and outposts in the West Bank, there can be no progress towards peace.

Harnessing this new historic opportunity in coordination with our Palestinian partners will pave the way back to a meaningful discussion about how we can overcome the outstanding challenging obstacles on the road to peace.

Final Status IssuesI believe that any settlement with the Palestinians must include solutions to the most challenging issues in order to have lasting impact on relations in the Middle East.

* SecurityThe security arrangement between Israel and the Palestinians must be predicated on a joint effort to fight terror. Militias and terrorist organizations must be dismantled. The Palestinian State will be void of all heavy weapons (i.e. artillery, armor, missiles) with the establishment of an effective inspection mechanism to validate and ensure demilitarization. Israel will maintain military presence along the Jordan River which would be re-examined every few years according to the regional security situation.

* BordersWhile based on the pre-1967 borders, the permanent borders between Israel and a Palestinian State will be adjusted to reflect the new realities on the ground. Approximately 5% of the West Bank, which includes that largest concentration of Israeli settlement blocs, especially those close to the green line, will be annexed into Israel. In return, in a "land swap," Israel will relinquish to Palestinians the equal percentage of land on its side of the border.

* JerusalemIsrael will annex adjacent Jewish neighborhoods and finally establish Jerusalem's identity as the eternal capital of the Jewish people. To ensure a Jewish majority in Jerusalem, the Arab neighborhoods in East Jerusalem will be transferred to Palestinian sovereignty. Jerusalem's holy basin, with sites sacred to Jews, Muslims, and Christians will enjoy a Vatican-like status with freedom of access ensured for all. An inter-religious council of the three faiths will be created to manage this arrangement.

* RefugeesPalestinian refugees will be entitled to immigrate to the Palestinian State, but do not have the right to return to Israel. The question of Palestinian refugees would be solved within the context of a comprehensive plan for regional economic development that will include every Middle Eastern country with a sizable population of refugees. This plan envisions cooperative desalination programs, irrigations projects, construction of canals to augment regional trade, the creation of joint transportation systems, cross-border tourism routes, and coastal gas exploration. The Palestinian refugees will become one of the primary beneficiaries of this far-reaching plan and the thousands of new jobs that it is expected to create.

US-Israel RelationshipThe special relationship that characterizes the strong connection between the United States and Israel is based upon shared values and the common aspiration for a free and democratic world. This relationship is the bedrock of our foreign policy. From my numerous meetings on Capitol Hill, conversations with Administration officials and counterparts in the Pentagon, I am convinced that the second greatest deterrent we possess,the first is our indegenous military strength, is the strategic alliance with the US, the sharing of intelligence and military technology, and our joint war against terror.

IranThe removal of Saddam Hussein has not guaranteed peace and security for Israel in this tough neighborhood. Israel faces very real threats from rogue states that feed anti-Jewish hatred to their masses and reject the existence and the legitimacy of a Jewish State in the Middle East.

We cannot ignore regimes inspired by dangerous anti-Jewish ideologues. We cannot ignore the production of weapons of mass destruction. We cannot ignore overt and unequivocal support for terrorism. If we choose to disregard this growing danger, then we have learned nothing from our recent history.

Iran ranks first in this particular club and presents the most dangerous existential threat to Israel. Iran's development of weapons of mass destruction and direct support for terrorist organizations has both short-term and long-term implications for Israel, the region, and the world.

Ideologically bent on the destruction of Israel and, with Russian assistance, Iran is pursuing the development of nuclear capabilities. The hundreds of centrifuges across Iran that will soon be capable of producing weapons-grade uranium in tandem with Iran's long-range Shahab-3 missile present a clear and present danger to Israel's national security.

Iran not only supports but continues to export terror as a means of destroying the Jewish State. Iran believes by pursuing a war of attrition that targets civilians, it can undermine and ultimately crash Israeli society. Tehran, through its financing Islamic Jihad and harboring and training Hamas operatives, often emerges as the source of terrorism in Israel.

After the IDF withdrew from southern Lebanon in 2001, the Iranian Revolutionary Guards and their proxy, Hizballah, deployed some 10,000 Ketyusha rockets and several hundred long-range rockets on Israel's northern border. Today, one out of five Israelis lives within range of these missile threats. This dark shadow is not only a dangerous thorn in the fledging peace process, but could be a potential detonate for full-scale regional war.

EconomyWhat Israel lacks in natural resources it compensates for in a wonderful wealth of human resources. Its commitment to education, innovation, and progress has sparked unprecedented growth and prosperity and an endless potential for development. From world-renowned hi-tech ingenuity to the pioneering of agricultural technology, Israel is on the frontline of today's technological revolution.

Political EconomyOver the past several years, the scourge of terrorism has devastated Israel's economy. Foreign investors turned their attention elsewhere, tourism plummeted, and unemployment spiked. There is no mistaking the fact that Israel's economy is inextricably linked to its security situation. A solution to the Israel-Palestinian conflict paves the way for a comprehensive economic regional development plan in which Israel will work with other nations of the Middle East, including the Palestinian state, on a variety of issues from tourism and agriculture to transportation and trade.

In the framework of an agreement with the Palestinians, Israel will need to absorb thousands Israelis living in the West Bank. While there are considerable costs to doing this, the economic ramifications of peace and the projected growth of Israel's Gross National Product will significantly improve Israel's economic conditions.

Fighting UnemploymentUnemployment is a serious and persistent problem in Israel. Israel's precarious security situation, the influx of foreign workers over the past several years, and the government's policy of providing significant subsidies to the unemployed have only aggravated the problem.

I propose that instead of subsidizing joblessness, the government should encourage unemployed people to return to work. A national vocational training program can help develop practical skills and build support systems to help facilitate re-entrance into the work force. Through financial rewards, the government can convert unemployment assistance into bonuses and benefits as incentives for people to return to work.

The government needs to do more to give people the chance to succeed. To lessen the burden on working class Israelis, I suggest that the government develop a tax structure that decreases the burden on average wage earners and augments the tax liability on wages over ten times the national median.

We should enhance government assisted child support by instituting the "extended school day" first to low socio-economic areas and areas with high levels of unemployment and giving preference to teaching subjects most applicable to the needs of employers such as mathematics, English, computers, and technology.

Encouraging GrowthInnovation and development are at the core of Israel's economic advantage. Along with the next generations of thinkers and investors, the Israeli government needs to play a significant role in promoting Israel's economic growth.

The government should introduce differential tax reforms on the capital market which will encourage investments in areas of production, Research and Development, and high employment sectors while taxing speculative short-term investments.

The government should encourage pension funds to invest in transportation, water, and energy infrastructures by providing government guarantees on the investments and preferential interest rates.

Foreign investment will be recruited for the national train system which will provide jobs and give the peripheral population access to the center of the country.

The government should encourage its citizens to purchase homes by recognizing mortgages as tax write-offs.

Environment

To vigorously protect the nature and landscape of Eretz Yisrael, and safeguard the environment, water and clean air for future generations.

SocialOur Jewish heritage, founded on unique humanitarian and social values, should lead us toward the creation of a strong, unified society. We must ensure human dignity and equal opportunity for all and raise social responsibility as the banner of our nation.

The government has a responsibility to protect, first and foremost, the individual worker and ensure that every citizen has the same chance for success and is encouraged to succeed. A wide and growing economic divide within Israeli society threatening harmony between the classes. Welfare cuts and mass layoffs exacerbate the crisis and create more poverty and less opportunity for low-income or unemployed Israelis.

A long-term initiative to close the gaps and guarantee economic equality requires a serious investment of resources, a focus on development areas, promoting minorities in the workforce, and assistance to the lower socio-economic segments of the population. Every citizen, rich or poor, should have the same access to comprehensive health care coverage. Each year, the national health basket should be reviewed and updated to guarantee proper modern care for all the country's residents. We need to address the needs of citizens with particular challenges - providing geriatric services for Israel's aging population, caring for people with special needs so that they can find employment and live in dignity, and assisting single mothers and new immigrants. Every family should have a roof over its head through public housing and government assistance. The government should pass a national pension law which will ensure that every citizen is financially covered in retirement or disability.